1. Arizona Chamber Executives Conference 2017
Rob Leslie, CPA, CGMA

2. Financial Key Elements any Chamber Should Have in Their Optics
Discussion points
Financial Reporting
Internal – What do we need to know?
External – What is the story that our financials tell?
Regulatory Reporting Issues – staying out of harms way!
General Best Practices
Internal Controls
External Influences

3. Internal Financial Reporting

4. Internal Financial Reporting
Where does this begin?
Understanding the business model that your chamber works under:
Revenues sources
Membership trends?
Expense parameters
Staffing
Hired
Volunteer/members
Attrition
Budgets
Where do we start from?
Zero based or not?

5. Internal Financial Reporting
What do we use to track and understand our fiscal performance?
Budget to Actual comparisons
Cash basis versus Accrual basis
How do we handle known changes to budgeted amounts?
Dash Board – who are the users?
Development
Critical indicators
Use – Management vs: Board

6. Internal Financial Reporting
Internal financial statement – What do they look like?
Who are the Users? – start here!
Management
Board /committees
Outside stakeholder
Level of detail
One report for all users?
Multiple reports with different levels of detail?
Summary reporting

7. External Financial Reporting

8. External Financial Reporting
Who Are The Users?
Board
Vendors
Financial institutions
What is the basis used?
Cash
Accrual
Other
What is the Story that is told?
Types of CPA Prepared Financial Statements – what is the difference in types?
Compilation
Reviewed
Audited
Other types of reporting

9. External Financial Reporting
Footnotes – What is required and what is optional?
Does your Chamber have affiliate entities?
Foundation
Publications
Building LLC
New Reporting Standards – only for GAAP basis F/S!
Two classes of net assets instead of three
Net Assets with Donor Restrictions
Net Assets without Donor Restrictions
Disclosure of future cash-flows – significant change and requirement!

10. Regulatory Reporting Issues

11. Regulatory Reporting Issues
Internal Revenue Service
990 filings – timely and complete?
Open for public viewing through GuideStar
Related entities?
Unrelated Business Income (UBI)
Lobbying and Political Activities
Income tax related to UBI
Payroll Filings and Taxes
In-house prepared
Payroll service company
NEVER borrow from withheld taxes to patch cash flow needs

12. Regulatory Reporting Issues
State Filings
Corporation commission
Department of Revenue
Sales and use tax
Multistate or other Jurisdiction filings

13. General Best Practices

14. General Best Practices
Internal controls – What are these?
Policies and procedures to protect the assets of the entity
What are the assets?
Accounting and reporting controls
General controls
COSO internal control framework – industry best practice!
Their website is full of documents to assist in developing and/or enhancing internal controls
First element of sound internal controls starts with “control environment” – aka “Tone at the Top”
How does your chamber communicate its “tone at the top”?

15. General Best Practices
What do sound controls help to prevent? – FRAUD
Are Chambers susceptible to fraud? – YES
Example – Utah Chamber
Two types of fraud
Misappropriation of assets – theft of assets
Financial Statement Fraud – most significant in effect in dollars – falsifying overall financial outcome to achieve an end result
Bank requirements to be met
Bonus calculations for executives

16. General Best Practices
Report to the Nations – fraud report published bi-annually by the Association of Certified Fraud Examiners – Free on their website
Actual cases used
Stratified by:
Types of fraud
Industries (non-profits)
Who are the perpetrators
Average life cycle of a fraud scheme is 18 months
You can’t fully eliminate the risk of fraud but you can mitigate it
Does your Chamber have a Whistle Blower Hotline? Or policy?

17. General Best Practices
There are many more best practices to discuss, all of these are predicated on:
The size of your Chamber
Staffing
Revenues and types of events and activities

18. Questions?

19. Thank You!
Rob Leslie, CPA CGMA